Mike the Mad Biologist

State Taxes and How Science Just Got a Lot More Inconvenient

Posted by Mike on March 26, 2010
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The NY Times has an interesting story about how state tax agencies are stepping up their efforts to collect money from people who earn money in another state, but don’t pay the taxes they owe in that state:

When Josh Beckett pitches for the Red Sox at Yankee Stadium, New York collects income tax on the portion of his salary that he earned in New York State.

But what about a Boston Scientific sales representative who comes to New York to pitch medical products to a new client? New York has decided it wants a slice of that paycheck, too.

Anyone who crosses a state border for work — to make a sales call, say, or meet with a client or do a road show on Wall Street — probably owes income taxes in that state.

If you live in Boston but spend one out of 250 workdays this year in New York, you owe New York income taxes on 1/250th of your salary. And vice versa if you are a New Yorker visiting Boston — or Anywheresville, for that matter — for business.

Maybe I’m being foolish here, but I don’t know very many scientists (ok, none actually) who file taxes in the states where they go for conferences or professional meetings. Me, I’ve spent time this year already in Texas, and will most likely also be in Maryland and California. Any scientists (or anyone else) reading who file income taxes in states in which they do only a few days work? Because I don’t think most people do this.

It’s not even the money, but the hassle: if you end up traveling to seven different states for a couple of days, filling out seven additional tax return forms isn’t fun. If this isn’t done easily, I could see a lot people wanting to change this, perhaps by passing income or days of work minimums. This could really backfire on states: I could see Republicans and conservaDems pushing this sort of bill.

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Comments

  1. #1 JohnV
    March 26, 2010

    We have facilities in Maryland and California and there are time sheet codes specific for each state. If you do work in both states during a given week you have two entries billing the same grant/contract.

    My PI was in California for vacation but needed to attend a couple of meetings at the CA facility while he was out there. He ended up just using vacation time to cover the couple of days he worked in order to avoid having to do California taxes.

  2. #2 NewEnglandBob
    March 26, 2010

    Just declare each trip a personal trip for pleasure because you are taking the day off from work.

  3. #3 Eric Lund
    March 26, 2010

    These policies have “can of worms” written all over them.

    The article says that one of the things states are looking at is reimbursement for air travel. Let us consider the hypothetical case of somebody who normally works in Nashua, NH, and travels on business to Vancouver, WA (or vice versa). He might fly between Boston and Portland, OR, because there is a nonstop flight available. (Or he might take a connecting flight out of either Boston or Manchester via an airport in a state that charges income tax.) Neither NH nor WA tax salary income, but both MA and OR do. Will MA and OR try to claim income tax because our hypothetical traveler passed through those states and was reimbursed for airfare between BOS and PDX? IANAL, but I suspect that may run afoul of Constitutional prohibitions on regulating interstate commerce.

  4. #4 Jim Thomerson
    March 26, 2010

    When I worked part time for the US Army Corps of Engineers in St Louis, I had to pay a city tax of $1/working day. The corps would supply me with a statement that I had worked x number of days outside St. Louis as appropriate for when I was afield. Illinois has state income tax, but my pension is exempt, and Texas, where I now live, has no state income tax. As a matter of dumb luck, I moved to Texas before I sold my house in Illinois, and thus did not have to pay Illinois income tax.

  5. #5 D. C. Sessions
    March 26, 2010

    This comes up every so often. After much Sturm und Drang the States figure out that the reciprocal taxation from other States results in a near-wash on revenue, with much additional expense for processing the returns and (obviously) a whole bunch of pissed-off voters.

    At which points the States agree to skip collecting on de minimus taxes and it all calms down until a new Pharaoh arises who knows not history.

    IIRC, the last time this came up it was California who wanted to tax the retirement incomes of people who had worked in California and retired to somewhere else.

  6. #6 Tantalus Prime
    March 26, 2010

    This is also true of sales tax; individuals are subject to their own state sales tax on purchases made outside of their state. Most states ignore it for the very reason that it ends up being a wash. However, Donald Schaefer made a big stink about this when he was Comptroller of Maryland, going so far as to try to set up inspection roadblocks on the border of Pennsylvania and Delaware.

    Forget about sales people and academics. What about long-haul truckers, train engineers, bus line drivers, and airline flight crews. They could easily have to file dozens of state income tax forms if such rules were followed strictly.

  7. #7 Jim Thomerson
    March 26, 2010

    I lived in new Orleans when Mississippi was a dry state. There were liquor and wine bottles with a Mississippi bootleg tax stamp on them. Those bottles were legally transported through Mississippi.

    There used to be a Great Lakes Sales Tax Consortium. It lasted a few years and put a number of small mail order business out circulation. I paid New York sales tax on something ordered while I lived in Illinois.